Liquidation

In United Kingdom, Republic of Ireland and United States law and business, liquidation is the process by which a company is brought to an end. The assets and property of the company are redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation. The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry.

Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation) or voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations are controlled by the creditors, see below).

In addition, the term "liquidation" is sometimes used when a company wants to divest itself of some of its assets. This is used, for instance, when a retail establishment wants to close stores. They will sell to a company that specializes in store liquidation instead of attempting to run a store closure sale themselves.

The parties who are entitled by law to petition for the compulsory liquidation of a company vary from jurisdiction to jurisdiction, but generally, a petition may be lodged with the court for the compulsory liquidation of a company by:

The grounds upon which one can apply for a compulsory liquidation also vary between jurisdictions, but the normal grounds to enable an application to the court for an order to compulsorily wind-up the company are:

In practice, the vast majority of compulsory winding-up applications are made under one of the last two grounds.